India may soon find itself at the receiving end of a new wave of global trade turbulence. According to a recent report by CareEdge Ratings titled "Sectoral Impact of US Reciprocal Tariff: Neutral to Negative," the imposition of high reciprocal tariffs by the United States on competing nations could prompt those countries to offload surplus goods into India and other accessible markets a move commonly referred to as “dumping.”

While the overall impact on India is assessed as ranging from neutral to negative, certain sectors may be more vulnerable than others. CareEdge notes that while India’s pharmaceutical sector will remain unaffected thanks to current exemptions from the US tariff policies—other industries such as electronics, textiles, agriculture, chemicals, and auto parts could face increased pressure. The fear is that with diminished access to the US market, exporters from heavily taxed nations may redirect their products toward India, saturating domestic markets and undercutting local manufacturers.

The report underscores the nuanced nature of the situation. While some sectors may manage to weather the storm due to strong domestic demand or existing trade barriers, others with already thin margins or less protection could struggle to compete. The textile industry, for example, though resilient, may find it challenging to maintain its momentum if faced with cheap alternatives flooding the market.

CareEdge has urged policymakers and industry stakeholders to remain vigilant. With global trade dynamics in flux, India must be prepared to counteract potential distortions, possibly through anti-dumping measures and strategic trade agreements. As the US recalibrates its trade strategies, the ripple effects are being felt far beyond its shores raising critical questions about market stability and fair competition in emerging economies like India.

CareEdge is knowledge based analytical group offering services in Credit Ratings, Analytics, Consulting and Sustainability.